Europe in the 19th and 20th centuries
During the 19th and 20th century, Europe witnessed its so-called demographic transition, with a fall in birth rates and an even greater fall in mortality rates, which led to a rapid increase in the population. The demographic transition was essentially a result of a decrease in chronic infectious diseases like tuberculosis, syphilis, diphtheria, measles, dysentery, and typhoid fever. The wage dispersion evidence suggests that the middle of the 19th century is an appropriate date for the start of modern convergence in the Atlantic economy. One might view this convergence as one of transition toward globally-integrated Atlantic factor markets. The convergence in wages from about 1854 to the end of the 19th century was the most extensive that the Atlantic economy has seen since 1830, including the better-known convergence of the post-World War II era, although the "speed" per decade wasn't as fast as during the spectacular post-World War II epoch (Crafts and Toniolo, 1996). Most of the convergence was complete by the turn of the century. Convergence wasn't limited to real wages and living standards of the working poor: GDP per capita converged as well (O'Rourke and Williamson, 1998, ch. 2). However, real wage convergence was much faster than convergence of GDP per capita, and the globalization arguments which follow offer some reasons why. Our measure of Atlantic economy wage dispersion can be decomposed into three additive parts: wage dispersion within the New World; wage dispersion within the Old World; and the wage gap between the Old World and the new (Williamson, 1996). On average, the wage gap between the New World and the old accounted for about 60 percent of the real wage variance across these 17 countries over the four decades prior to 1913. The remaining 40 percent of the real wage variance was explained equally by the variance within Europe and within the New World. Thus, real wage variance among...
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